FISCAL 2017 BUDGET

Obama climate wish list slams into Supreme Court surprise

President Obama released a $4.1 trillion budget request for fiscal 2017 that puts climate change and clean energy spending front and center. Republicans have declared it dead on arrival. Photo by J. Scott Applewhite, courtesy of AP Images.

Funding for the final piece of President Obama's climate legacy was thrown into a tailspin late yesterday when the Supreme Court put the brakes on federal power plant regulations.

The move by the court's five conservatives to block U.S. EPA's Clean Power Plan introduces new uncertainties to an already-unlikely $4.1 trillion request that reaches beyond Obama's remaining 11 months in office to a hypothetical future where Congress supports and funds climate change action.

As of late yesterday, it was unclear precisely what the Supreme Court's decision to halt the climate regulations would mean for the budget request. But Republicans who have led the fight against the federal efforts cheered the ruling.

"Last year I called on governors to hold off submitting plans mandated under the President's regressive federal energy regulations until courts could determine whether the regulations were even legal. Today's Supreme Court order to halt those regulations -- regulations that attack the middle class and won't even have a meaningful impact on global carbon emissions -- is just the latest sign they may not be," Senate Majority Leader Mitch McConnell (R-Ky.) said in a statement.

The administration's fiscal 2017 budget is its bucket list, replete with spending, tax and policy items that would need approval from the GOP-led Congress to become reality. Funding for climate change touches almost every part of the package. The 182-page document's cover even features a picture of a snow-covered Denali mountain.

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"The challenge of climate change will define the contours of this century more dramatically than any other," Obama declared in the introduction to the budget.

He cast his numerous proposals to curb greenhouse gas emissions and fund low-carbon energy development at home and abroad as innovation boosters "that will drive new jobs, new industries, and a new understanding of the world around us."

Obama also used his last weekly address before the budget rollout to highlight his proposal to double clean energy research and development funding to $12.8 billion, and implore Congress to back it.

He has already promised the international community that the United States will deliver that level of increase between now and 2021 as a member of the 20-nation Mission Innovation initiative launched on the opening day of last year's U.N. climate summit in Paris. The fiscal 2017 request calls for an interagency investment of $7.7 billion -- $900 million over fiscal 2016 levels that would need congressional authorization.

Obama said this was a case when home-state concerns might trump partisan climate politics.

"While Republicans in Congress are still considering their position on climate change, many of them realize that clean energy is an incredible source of good-paying jobs for their constituents," Obama said in the weekly address.

But the energy policies outlined in the budget run the gamut from hard sells to "dead on arrival" on Capitol Hill.

Obama aides hopeful even as GOP vows opposition

Congress has shown little eagerness to hand Obama any new climate or energy wins in his final year, when nine Republicans are vying to replace him. Meanwhile, the president spent last year adding domestic and international accomplishments to his climate legacy that Republicans say required a go-ahead from Congress.

While stand-alone legislation to kill either U.S. EPA's power plant carbon rule or U.S. participation in the Paris climate deal faces long odds, funding for either initiative is likely to be a struggle.

And that was before the Supreme Court ruling.

Budget committee lawmakers have already said they won't hold the usual hearings with Office of Management and Budget Director Shaun Donovan because they see the budget as a political document. And committees of jurisdiction pledged to scrutinize all aspects of the budget.

Senate Environment and Public Works Chairman James Inhofe (R-Okla.) vowed to ensure that U.S. EPA funding goes to infrastructure instead of "climate boondoggles," while Sen. John Barrasso, a Wyoming Republican and head of a key Senate Foreign Relations subcommittee, pledged to scrutinize the Paris agreement.

"We're going to continue to take a look at the fact that the president says he doesn't come to Congress," Barrasso told Climatewire yesterday on Capitol Hill. "If the president wished to put these things forward, then he's going to need congressional approval from the standpoint of a treaty and advice and consent."

But while Obama's lame-duck wish list seems sure to encounter headwinds on Capitol Hill, Donovan cautioned reporters to resist the "conventional wisdom" that the budget is irrelevant.

Republicans might support some of the new initiatives on energy, he said, while others might succeed even without broad bipartisan support. Congress did not limit funding for contributions to the U.N. Green Climate Fund or Clean Power Plan implementation as part of the fiscal 2016 omnibus bill despite Republican opposition, he noted.

Meanwhile, the budget may lay down markers for policies that will ripen during some future administration, he said.

"Those proposals may not be enacted this year but they lay the groundwork for reaching solutions in the long run," Donovan said.

Budget or political platform?

GOP energy strategist Mike McKenna said Obama's final budget reads less like a blueprint for what Congress should enact this year and more like a road map for where the next Democratic president should begin next year.

"It's kind of the next Democratic platform," he said, adding that the proposed oil tax in particular could prove inconvenient for one former member of Obama's Cabinet now running to succeed him.

"That puts Hillary Clinton in a terrible spot," McKenna said. It will be difficult for the former secretary of State to distance herself from the administration's tax proposal -- which is designed to make fuel more expensive -- while continuing to argue that she's running as a progressive, he said.

McKenna noted that former President Bill Clinton has sometimes blamed his first-term proposal for a Btu tax, or a tax on energy sources based on its energy content in British thermal units, for helping Democrats lose control of Congress in 1995.

Kevin Book, managing director at ClearView Energy Partners, said the final Obama budget acted as a kind of "bookend" for the president's first budget in 2009. Both talked about transforming the energy sector, ushering in new industries at the expense of incumbent fossil fuels.

In 2009, the administration planned to use revenues from a cap-and-trade bill to effect that transformation, he said, while yesterday's budget would raise $45 billion a year from the oil and gas sector.

"Some things old, some things new," he said. "It's almost as if the president has gone full circle. He's completed his pragmatic middle six years, and he's back to the year-one green agenda."

U.S. EPA and Clean Power Plan provisions

The administration requested $8.267 billion in discretionary funding for U.S. EPA, including $235 million for programs to combat climate change. The total is an increase from current spending levels of $8.1 billion but a decrease from the $8.6 billion the administration asked for last February.

The administration asked for $25 million to help states implement the Clean Power Plan, including $7.5 million that would be made available directly to state agencies. That money now faces even bigger hurdles on the road to approval than before (see related story).

EPA Administrator Gina McCarthy said the rule is at the center of Obama's international commitments to reduce greenhouse gas emissions.

"In December, 195 countries came together in Paris to prove the most ambitious climate agreement ever, and EPA's Clean Power Plan was essential to that agreement," McCarthy said. "So we have promises to keep, and in the next fiscal year, we're going to build on those promises and make more progress."

Forty percent of EPA's overall budget, or $3.3 billion, would go toward state and tribal assistance grants to implement various programs, including for air, surface and drinking water, pesticides and wetlands. That's a decrease from current spending levels of $3.5 billion, but the White House highlighted a plan to shift some $77 million to state categorical grants.

Obama also proposed an additional $1.65 billion, 10-year fund for retrofitting, replacing or repowering diesel equipment, like school buses. Of that, $300 million in fiscal 2017 would go toward the diesel emissions reduction grant program, with priority given to zero-emission bus fleets and charging networks that support the power grid through vehicle-to-grid technology.

That fund is related to a proposal the administration unveiled last week that would levy a $10-per-barrel tax on U.S. oil to provide $32 billion a year for clean vehicle development, public transit and urban planning.

International climate finance

The budget would also ramp up the U.S. contribution to the Green Climate Fund (GCF), requesting a combined $750 million from the State and Treasury departments for fiscal 2017.

The United States has pledged a total of $3 billion over four years toward the fund, which helps poor countries cope with the impacts of warming and limit their own emissions.

Republicans promised last year that they wouldn't approve the first $500 million toward the fund unless Obama agreed to submit the Paris accord for Senate ratification. But Sens. Mark Kirk (R-Ill.) and Susan Collins (R-Maine) championed an amendment in the Appropriations Committee that cleared the way for the funding to go forward, and the State Department has said it can provide the full amount.

Greens applauded the administration for increasing its contribution in yesterday's blueprint, but Karen Orenstein of Friends of the Earth said the attitude toward climate aid must change.

"Congress needs to catch up with the 21st century and start treating climate change like the planetary emergency that it is," she said.

Yesterday's budget also cuts the State Department request for the Clean Technology Fund from the enacted $227 million to $171 million for fiscal 2017. But the drop is due to the fact that the United States has almost finished meeting its $2 billion pledge to the United Nations' Clean Investment Funds, which was made under President George W. Bush.

The request for State's contribution to the Global Climate Change Initiative will stay effectively static at $1.3 billion, pursuant to an agreement struck last year between the White House and congressional leadership.

Ongoing debate over oil tax

The Department of Energy is requesting a 9.8 percent increase to its budget for 2017, to $32.5 billion, with a large chunk going toward supporting the United States' international commitment to double clean energy research and development funding under the Mission Innovation initiative.

DOE is doing the heavy lifting for Mission Innovation, drawing 76 percent of the clean energy research funds amounting to $5.85 billion.

"I think the innovation agenda is one that a lot of people can get around, and have gotten around, in a bipartisan way," Energy Secretary Ernest Moniz said. "This is obviously a very large increase being proposed, but then again, there's a lot of support."

More details also emerged yesterday on the administration's 21st Century Clean Transportation Plan, which the president announced last week will be funded by a fee on oil producers.

Republican opposition to the oil levy means the future of the clean transportation investments is murky at best.

The Department of Transportation would receive the majority of the more than $300 billion in revenue from the $10.25-a-barrel oil fee over the next 10 years. The proposed spending on public transit, urban planning and clean vehicles boosted the department's overall budget request to $98.1 billion. That represents a major jump from the approximately $76 billion enacted for fiscal 2016, but only a slight increase from last year's request.

Deron Lovaas, who works on energy efficiency and transportation at the Natural Resources Defense Council, said the Transportation Department's emphasis on competitive grants and local funding follows priorities set in previous budget requests, but at a larger scale.

"It's a much bigger down payment on that vision," Lovaas said. "I'm hoping this sets the terms for the debate going forward, for how much money goes to states versus cities and suburbs, how much money goes to rail and transit."

Part of the Clean Transportation Plan would also be implemented through the Energy Department, which requested $11 billion over 10 years, starting with $1.3 billion in fiscal 2017, for clean transportation, separate from increased clean energy funding that came through Mission Innovation. New initiatives would boost research and development in biofuels, batteries, vehicle automation and low-carbon charging infrastructure.

As he has done in previous years, the president also requested tax credits for the production of advanced-technology vehicles and medium- and heavy-duty alternative-fuel commercial vehicles.

Zika and related health funding

The request allocates $82.8 billion in discretionary funds for the Department of Health and Human Services. The agency conducts research on the health effects of climate change and monitors the spread of infectious diseases that have links to a warming world.

"The Budget shows that the President and the Administration remain focused on meeting our greatest challenges -- including accelerating the pace of innovation to tackle climate change and find new treatments for devastating diseases," the agency wrote in a release.

On Monday, the White House announced a request for $1.48 billion for the Department of Health and Human Services for its fight against the Zika virus outbreak (ClimateWire, Feb. 9).

"We are working 24/7 to understand this virus, to detect it where it is occurring and to prevent its spread," said Dr. Anne Schuchat, deputy director o the Centers for Disease Control and Prevention, at the White House on Monday.

While the CDC is holding its line item for climate change steady at $10 million in its budget request, the agency aims to turn emergency Zika funds toward diagnostics, support and vector control.